Review of Motley Fool’s Stock Advisor
Motley Fool’s Stock Advisor Review
In this review I examine Motley Fool’s Stock Advisor service. A subscription service where Motley Fool does the time consuming research for you, then presents you with stocks they feel you should buy now.
Every month, the two owners of the Motley Fool send you thier best stock to buy now. Every month they also send you 10 other stocks to buy now for 12 stocks per month you need to invest in. Over a year’s time that’s 144 stock picks you need to buy.
While subscribing to proven services such as Stock Advisor is the fastest way for anyone to make gains in the market when they first start, in this Stock Advisor review I’ll go over the four things you need to look for when evaluating any trading service such as Stock Advisor.
4 Things To Look For
There are 4 things I look for when reviewing a service like Motley Fool Stock Advisor.
- What are my expected returns?
- How much will it cost me to get those returns?
- Can I do the required trades on my schedule?
- Do they have a money-back guarantee period to allow you to verify returns and to see if it is for me?
What Are My Expected Returns?
I recently visited their site on March 13, 2019 where i found the following returns advertised:
According to this chart on their website, they advertise doing 6x better then the S&P since 2002 (S&P went to $38K Stock Advisor went to $210K). Doing 6x the S&P is fantastic. However, since their service is ONLY about stocks you have to buy now and hold, it’s not clear where this return comes from. Is it from all 2,304 buy alerts they gave out over that time period? If so, do you have enough funds to buy and hold all 2,304 stocks? If not, you may not be able to duplicate.
Now if we compare the return of Stock Advisor to my own Index Trading System we see something quite different. Note: My advisory service started in 2009. Because of this the chart has been updated to reflect returns from 2009 to 2018.
Now Stock Advisor’s return does not look as good. We all have only a certain amount of time before we retire (or pass away). The bigger the gains, the faster our money grows and the better chance we have of hitting our financial goals.
What Are My Costs?
Stock Advisor runs $19 month or $199 annually. In addition, you’ll need to buy 24 stocks per year minimum. If your costs per trade are $5 each, figure another $120 annually for trading commissions. If you have an app like Robinhood that offers free trades you won’t have that cost. If you would like to signup for free trades, you can use this link and get yourself a free stock wen you join Robinhood.
These are very reasonable costs. My own Index Trading System is $19.95 per month and $199 per year. The Index Trading System has 14 to 20 trades per year.
As you see, both services are priced the same except the Index Trading System has returned more each year, AND will actually show you the trades that make up that gain, unlike Stock Advisors lack of transparency.
Can I Do This?
With Stock Advisor, every week on a Thursday, stock picks are given. These are stocks to buy now and just hold forever. The Motley Fool owners believe in a buy and hold approach.
Each of the owners gives their favorite pick each month and also each month, you get a list of 10 stocks you should buy now. Their recommendation is to buy all, so you will need to make 12 buys each month. The alternative is to just guess which one or two of the twelve will do best, but heck, you can do that on your own without having to pay for a service.
So plan on buying, managing, and tracking about 144 stocks every year. After a few year you could be up to a few hundred. This could account for their poor returns compared to the Index Trading System. Stock Advisor will have you over diversified.
My Index Trading System comes with a trading strategy. There is only one ETF to buy. I email or text you what to buy after the market closes. You set an order to buy the ETF at it’s buy price. That’s it.
Check on your order shortly before the market close. If it did not execute, make the buy before the market closes. Then you wait 2-3 weeks for the sell alert and repeat. If you can do this, you can follow the Index Trading System.
Is There A Money Back Guarantee?
Stock Advisor does have a money-back guarantee, but ONLY if you signup for the annual plan. The only way you will be able to verify they are beating the stock market is if you buy the annual plan. Then you can go in for 30 days and see what they recommended in the past and what the returns were for all 144 buy recommendations each year. If they can’t show you those, beware.
Be warned they will have salesmen contact you while you have a subscription and offer you many of their other products.
My Index Trading System offers a 30-Day Money-Back Guarantee which means you pay up front, but have 30 days to verify returns and see if it’s something you can do. Cancel within 30 days and get full refund of your subscription fee (and you don’t have to ask – comes automatically). The guarantee comes with monthly and annual plans.
To wrap up this Motley Fool Stock Advisor Review I’ve put together a chart comparing Stock Advisor against ITS. Hopefully it will help you make a decision, or subscribe to both for a few months and see which is better for you.
Now that you have the facts, I’m sure you can now make a more informed decision as to which advisory service is best for you.
There is no guarantee that my trading system, or Stock Advisor will do similar gains in the future.
To your success.